Early Termination Fees
When purchasing wireless service, many consumers signed a legal contract agreeing to receive one or two years of wireless service from a particular provider. Along with that contract, consumers likely received a free or greatly discounted wireless handset and accessories, as well as a large allotment of talk time and other services and features.
If a consumer decides to cancel their wireless service before the end of the contract, they may be required to pay an early termination fee. While most customers will complete their contracts and never pay early termination fees or ETFs, a few have faced these fees and in turn questioned the need for them.
ETFs enable wireless service providers to offer attractive discounts and monthly pricing to customers willing to make a minimum service commitment, while providing some measure of compensation for lost revenue and otherwise unrecoverable costs caused customers’ breaking their contracts. Research has shown this practice is not unique to the wireless industry: airlines charge cancellation fees; real estate transactions may require non-refundable deposits; and car dealers assess fees for breaking leases.
The majority of consumers choose wireless service plans that include ETFs because of the significant benefits received. However, there are options for consumers who don’t want to sign a contract and, in the event that contract is broken, face early termination fees. All national wireless service providers and many regional providers offer month-to-month and/or prepaid wireless plans, which do not feature ETFs. Also, consumers typically can choose among service plans of varying lengths, most commonly 12 and 24 months.
If states are allowed to eliminate or impose regulations on ETFs, consumers will ultimately be hurt, because service providers will no longer be able to offer nationwide, uniform plans and pricing. This could lead to higher monthly bills and fewer service plans for consumers. Without early termination fees, the prices for wireless service, devices and special features would likely be higher than if ETFs existed.
MyWireless.org Coalition asks the FCC to promptly resolve pending legislation on early termination fees ("ETFs").
Letter to FCC Commissioner Deborah Taylor Tate
Letter to FCC Commissioner Jonathan Adelstein
Letter to FCC Commissioner Kevin Martin
Letter to FCC Commissioner Michael Copps
Letter to FCC Commissioner Robert McDowell
